Proceed at your own risk when projecting SS benefits. For past SS recipients SS benefits were solid. In 8 years the SS reserve is depleted. Future benefits will be based on actual SS taxes collected resulting in a 21% or so reduction of benefits, $3,000/mo becomes $2,400/mo. Won't happen? My optimism is challenged considering the Federal government spends roughly $6.5 trillion, collects $4.5 trillion and borrows $2.0 trillion. Interest on the debt is the 3rd highest expense category after SS and Medicare. SS has been a "safe" asset but change appears to be on the horizon. Would we be better off investing SS tax in a private account is an interesting hypothetical question. In the example Rick Conner outlined, 4% was spent from the $2.0 million account. Using the equivalent return of 7.9%, the income was greater and the principle was not touched. In fact it grew 3.9%/yr. doubling in 17 years. With a private account I'm better able to match my financial life with personal life. If only I could put that horse back in the barn... JC commented that SS has a demographic problem. I concur. More people paying into the system will continue to float SS. In the meantime, SS benefit reduction is something I'm paying attention to, 8 years may/may not be a long time.
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Proceed at your own risk when projecting SS benefits. For past SS recipients SS benefits were solid. In 8 years the SS reserve is depleted. Future benefits will be based on actual SS taxes collected resulting in a 21% or so reduction of benefits, $3,000/mo becomes $2,400/mo. Won't happen? My optimism is challenged considering the Federal government spends roughly $6.5 trillion, collects $4.5 trillion and borrows $2.0 trillion. Interest on the debt is the 3rd highest expense category after SS and Medicare. SS has been a "safe" asset but change appears to be on the horizon. Would we be better off investing SS tax in a private account is an interesting hypothetical question. In the example Rick Conner outlined, 4% was spent from the $2.0 million account. Using the equivalent return of 7.9%, the income was greater and the principle was not touched. In fact it grew 3.9%/yr. doubling in 17 years. With a private account I'm better able to match my financial life with personal life. If only I could put that horse back in the barn... JC commented that SS has a demographic problem. I concur. More people paying into the system will continue to float SS. In the meantime, SS benefit reduction is something I'm paying attention to, 8 years may/may not be a long time.
Post: Social Security vs. Private Investment Accounts – RCC runs some numbers.
Link to comment from February 4, 2025